Move health insurance out of the workplace
06 04 08 - 17:27
In this presidential election year, health-care reform is once again attracting significant attention. Polls show that health-care access and cost are two of the primary domestic concerns of voters of all persuasions. Unfortunately, all of the major candidates' proposals depend, in one form or another, on continuing the most problematic aspect of our current health-care system: employer-based health coverage.
The involvement of employers in providing health coverage, almost unique to the United States, is an artifact of a moment in history. Wage-price controls in place during World War II prevented unions in war-related industries from bargaining over salary, so they turned to negotiations for health benefits instead. Half of all Americans with health insurance now get it from an employer.
But why should employers be involved in their employees' health care? Perhaps in the world of the mid-20th century, when many people spent their entire working lives with one company, it was feasible. However, in today's transient work world, where most individuals change employers many times over a lifetime, this reliance on employers makes little sense economically.
More sensible, in a number of ways, is a system that puts a single payer (the government) rather than many thousands of payers (corporations) in charge of funding health-care coverage. Other, less desirable, alternatives to employer-based coverage include providing everyone with health savings accounts or offering tax credits to offset the costs of health insurance.
Perversely, employer coverage discourages companies from covering preventive services, because of the lack of a short-term return on their investment. Companies don't want to pay for prevention because by the time a person gets the condition that could have been prevented by the company's investment, there's a good chance that person will no longer be working for the company.
The costs of health coverage have grown at far greater rates than many other sectors of our economy, putting greater and greater strain on businesses that provide coverage for their employees. This trend is particularly hard for small businesses, which have increasingly been dropping coverage for their employees over the past decade.
Finally, because of recent court decisions, employers that provide health coverage will now have to change their practices to adequately cover the costs of retiree health benefits as well.
Given all these factors, it should be easy to decouple insurance from the workplace, right? Wrong. The biggest obstacle to eliminating reliance on employer-based coverage is not economic but political.
Employers' concerns, conveyed loudly to state and federal legislators, are among the largest impediments to providing health care for all Americans. They tend to be more fearful of a new system than they are worried about the costs and headaches associated with the status quo.
What, then, is the solution? It is clear to me that the only way to equitably provide comprehensive health coverage for all Americans is to require contributions by all of society through a corporate and individual tax to cover the costs of health care.
Businesses that provide health coverage for their employees are not only paying for their employees' health care, but they are also subsidizing the costs of health care for employees of companies that do not provide coverage. In Maryland, more than $1,000 of the premiums for a typical family covered by an employer goes directly to cover the costs of the uninsured.
Further, by paying a tax in lieu of directly paying for health insurance, employers can eliminate the often huge administrative burden of negotiating and managing health coverage for their employees. They would be free of the human resources burden, too — no employees screaming because their benefits didn't cover X,Y or Z.
Although businesses that don't provide health coverage would now be taxed, they would benefit from increased retention of their employees. (Lack of health benefits has long been shown to be the largest reason that people leave jobs.)
Some businesses, particularly large corporations, are starting to see the light and are now calling for universal health coverage. They are doing so because they are spending up to 20 percent of their payrolls on health care, instead of investing those resources in product development or new processes so that they can compete globally with companies from countries where the costs of health care are not borne so heavily by employers.
The bottom line: It's in the best interest of American business to decouple the provision of health insurance from the workplace. With all businesses providing their fair share of taxes to cover all Americans, they will free themselves of unnecessary burdens, create a fairer playing field and become more competitive globally.
Beilenson is the health officer for Howard County in Maryland and the founder of the state's Health Care for All initiative. He wrote this for The Baltimore Sun. Send e-mail to pbeilenson@howardcountymd.gov.